Oklahoma Gov. Mary Fallin on Monday called on the Legislature to cut the state's highest income tax rate by 0.25 percent and recommended that lawmakers cut most state agencies' budgets by 5 percent to help pay for it.

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"I believe responsibly lowering the income tax is the right thing to do," Fallin said during her State of the State address. "Let's take this opportunity to show our country that lower taxes and limited government do work."

Fallin said she knows her request for 5 percent cuts in most agency budgets will cause some to proclaim the sky is falling. "But guess what? It's not," Fallin said. "Any business worth its ... salt can find 5 percent cost savings without crippling the services it provides. Families have to make the same decisions and the same choices all the time."

Fallin used some of the most colorful language in her speech to call for a bond issue to repair the state Capitol, which is crumbling both outside and within its walls and plumbing systems.

"This building has become a safety hazard," the governor said. "The yellow barriers outside are an eyesore, and it's an embarrassment. ... The water stains that you see on the walls downstairs? I have bad news for you. That's not just water. It's raw sewage. It's literally leaking down into our basement. On the 'good' days, our visitors and employees can only see the disrepair in our Capitol. On bad days, you actually smell it."

The governor's executive budget calls for a $120 million bond issue for Capitol repairs and would appropriate $7.68 million for the first year's debt service.

Fallin also is asking the Legislature to:

--Consolidate several state agencies.

--Continue to fight Obamacare expansion.

--Allow patrons of local school districts to vote to raise their schools' debt limits to pay for tornado shelters and other public safety improvements.

"This was a speech that was heavy on politics and light on policy," countered Scott Inman, House Democratic leader. "If you're a state trooper today, if you're a teacher today, if you're a firefighter, if you're involved in state government at all, this was not a good speech for you, because on the whole, most of you are going to take a cut."

Inman said the governor's proposed tax cut would primarily help the highest paid 1 percent of Oklahoma's population. The governor cited an expected $170 million anticipated shortfall in next fiscal year's general appropriations budget as necessitating the state agency budget cuts but recommended that a few agencies be spared and even granted increases.

The Education Department, Department of Human Services, Department of Public Safety and Corrections Department would be among the budget winners.

"Good education requires appropriate funding," Fallin said. "That's why I am proposing a $50 million increase to help students at our K-12 schools."

The governor's executive budget suggested that the education funding increase be used for local school district operations, reading sufficiency programs, charter school building funds and teacher benefit costs.

The governor is asking that DHS be given an additional $36 million to "meet its obligations to improve and reform child welfare services, while giving child welfare workers a deserved pay increase to aid in their recruitment and retention."

The governor's executive budget recommends a $5 million appropriation increase to the Department of Public Safety to pay for state trooper pay increases beginning Jan. 1, 2015. That would fund pay increases averaging roughly 22 percent, said Maj. Rusty Rhoades, spokesman for the Department of Public Safety. Even with that big bump in pay, beginning salaries still would be only 90 percent of the average of the top three paying law enforcement agencies in the state, he said.

Fallin is asking that the Corrections Department be given $2.4 million more for operational needs as determined by the agency's new director.

The Oklahoma Department of Mental Health and Substance Abuse Services is one of the few state agencies that would receive neither an increase nor decrease under Fallin's proposed budget. The governor noted that she had secured an additional $28.6 million in funding for the agency during her first term in office and said she was proposing to maintain current funding levels to ensure progress continues.

Fallin successfully pushed for agency consolidation during her first term and is back this year recommending more.

This time, Fallin is recommending that the state Arts Council, Historical Society, J.M. Davis Memorial Commission, Will Rogers Memorial Commission and Oklahoma Scenic Rivers Commission all be consolidated into the Oklahoma Tourism and Recreation Department.

Fallin also wants to consolidate the Commission for Teacher Preparation into the Commission for Educational Quality and Accountability, a move she says will save the state 15 percent the first year.

State troopers and DHS child welfare workers were the only state employees set to receive targeted pay increases in Fallin's proposed budget.

However, the governor said she wants to "reform our current pay system to one that rewards performance over time served." Fallin said she also wants the Legislature to switch newly hired state employees from a traditional defined benefit pension plan to a 401(k)-style defined contribution plan.

Much of the governor's speech resembled a Republican pep rally.

She touted the accomplishments of her administration and the Republican-dominated Legislature in passing legislation designed to deter frivolous lawsuits.

She also praised the Legislature for enacting laws to convert Oklahoma's workers' compensation system from a judicial-based system to an administrative system.

Oklahoma's unemployment rate, which stood at 7.2 percent when Fallin took office, "is now down to 5.4 percent," she said. "Oklahoma families have seen their incomes rise by 6.3 percent since January 2011."

Gov. Mary Fallin signed legislation that will set the state's oil and natural gas gross production tax for the first 36 months of production. The rate had historically been 7 percent and was recently lowered to 4 percent.
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